Obama 'urges aid for US car-makers'

Obama pressed the US president to provide aid to car-makers during his first round of transition talks with the US president at the White House on Monday, aides reportedly said.

However the White House rejected claims that Bush linked support for economic stimulus measures or further aid to US automakers to congressional passage of free trade pacts, such as that with Colombia, during the meeting.

"The president did not suggest a quid-pro-quo," said Dana Perino, a White House spokeswoman, adding, however, that Bush did speak to Obama about free trade.

Al Jazeera's John Terrett in New York says that there is a feeling that General Motors, and its fellow Detroit-based auto-manufacturers Ford and Chrysler, are a lost cause and that that they should be allowed to merge - ending unpopular models and closing down factories.

"The problem is that would effect a huge number of American jobs - not just those directly employed but millions who work in industries that supply the vehicle makers with things like seats, windscreens and car radios to the industry."

Democrat appeal

Democratic leaders of US Congress had called on Saturday for some of the $700bn US bailout plan for the financial sector to be diverted to the struggling auto industry.

Auto-makers have blamed the slumpon the global financial crisis [Reuters]

Harry Reid, the senate majority leader, and Nancy Pelosi, the speaker of the House of Representatives, said they urged Henry Paulson, the US treasury secretary, to use his wide-ranging powers under the Emergency Economic Stabilisation Act (EESA) to aid auto manufacturers.

Pelosi said in a statement on Tuesday that aid was needed "to prevent the failure of one or more of the major American automobilemanufacturers, which would have a devastating impact on our economy,particularly on the men and women who work in that industry".

"Congress and the Bush administration must take immediate action,'' she added.

Tony Fratto, a White House spokesman, however, appeared to reject the appeal on Tuesday, declaring "our position hasn't changed," and saying that US politicians had already created a loan programme "specifically designed to assist auto makers".

"If Congress intends to consider legislation to accelerate funds they've already appropriated, we'll listen to their ideas - as long as funding will continue to go to viable firms and with strong taxpayer protections," said Fratto.

But on Monday, Rick Wagoner, the chief executive of General Motors, said the company needed a federal aide package before Obama took office in January.

"This is an issue that needs to be addressed urgently," Wagoner told Automotive News, adding that now is the time to "overshoot, not undershoot" the level of assistance.

US auto-makers have blamed a slump in sales on the global financial crisis, which has made it difficult for vehicle-buyers to obtain credit.